Three former leaders of the Federal Reserve have strongly criticized the criminal investigation into current chair Jerome Powell, labeling it an "unprecedented" attempt to compromise the independence of the central bank. In a joint statement released on Monday, ten prominent figures in economic policy, including past Treasury secretaries, expressed their support for Powell alongside former Fed chairs Janet Yellen, Ben Bernanke, and Alan Greenspan.
They emphasized that the independence of the Federal Reserve and the public’s perception of its autonomy are vital components for achieving strong economic performance. Their statement firmly asserted, "This kind of investigation has no place in a nation where the rule of law is a core principle, supporting our economic achievements." They further pointed out that such inquiries are characteristic of emerging markets with fragile institutions, often leading to harmful effects on inflation rates and overall economic functionality.
The group comprised former officials who served under both Democratic and Republican administrations, highlighting the bipartisan concern regarding this issue. Their condemnation came shortly after Powell revealed that the U.S. Department of Justice had issued subpoenas to the Federal Reserve and threatened criminal charges related to his testimony before a Senate committee about renovations to Fed buildings.
In a rare and unscheduled video address, which drew significant attention, Powell also described the investigation as "unprecedented" and suggested that it was motivated by former President Donald Trump’s dissatisfaction with the Fed’s reluctance to reduce interest rates more aggressively. In the second half of 2025, the central bank had adjusted its target lending rate downward three times, bringing it to a range of 3.50% to 3.75%, marking its lowest point in three years. However, Trump has consistently expressed that he desires sharper cuts in interest rates than what the Fed has provided.
Powell framed the Justice Department's inquiry within the broader context of the pressure and threats posed by the current administration. Trump has openly called for the Fed to lower interest rates to alleviate the U.S. government's substantial borrowing costs and to facilitate easier access to loans and mortgages for Americans. Over the past year, he has been vocally critical of Powell via social media and in public statements, even hinting at the possibility of firing him, although he later retracted that idea. Analysts argued that such a move would likely create turmoil in the financial markets and lead to legal challenges.
In response to the investigation, Trump claimed he was unaware of any details surrounding it, and the Justice Department has yet to provide a comment. Yellen, who briefly led the Fed during Trump’s first term before Powell took over, remarked separately that the investigation is "extremely chilling." She expressed confidence in Powell’s integrity, stating, "Knowing Powell as well as I do, the chances that he would have lied are zero," implying that the motivation behind the probe may stem from a desire to remove him from his position.
Yellen also cautioned investors about the implications of this situation, pointing out that a president advocating for the Fed to cut rates could ultimately lead to a scenario reminiscent of a "banana republic." As Powell’s term as Fed chairman is set to conclude in May, Trump is expected to nominate a successor in the coming weeks. However, the ongoing investigation and the subsequent backlash could complicate the confirmation process.
Republican Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, has announced that he would oppose any nomination for Powell’s replacement or other Fed Board positions until the legal matters are fully resolved.
Initial reactions from U.S. stock markets were relatively calm on Monday, with the S&P 500 showing little movement in early afternoon trading. This reaction contrasts sharply with previous years when market fluctuations were noticeably influenced by perceived threats to the Federal Reserve’s independence. Still, analysts caution that market responses might intensify if Trump manages to sway Fed policy in his favor. Thierry Wizman, a global FX and rates strategist at Macquarie Group, noted that traders might currently perceive limited success for the White House in achieving its objectives regarding monetary policy.
